4 Jackson Reforms Traps You Need to Watch Out For

The Jackson Reforms came in to force on 1 April 2013 and, when it comes to costs, they have changed the way you’ll do business forever.

But having been so recently introduced, there are bound to be a few teething problems.

And there are.

Whilst it is likely that all of the reforms will have some effect on the way in which independent lawyers and sole practitioners go about their business, there are four areas to particularly watch out for:

1. Proportionate Spending and Costs Budgets

The key word in the Jackson Reforms is ‘proportionate’. That’s what your spending needs to be from now on. And if it’s not, then you’ll pay the price.

So the controversy surrounding what ‘proportionate spending’ actually is isn’t exactly ideal.

What’s certain is that costs are something you’ll have to consider very early on in proceedings. Costs budgets for most cases must now be filed in the form of a Precedent H prior to the CMC.

It’s worth getting your head round exactly how to fill in Precedent H, because if it’s not filed, then your business could face draconian sanctions. And for parties that do file, but who fail to stay within budget, then their costs will not be fully recoverable. Even if they win their case.

2. DBA Scenarios

DBAs are the brand new form of funding arrangements, whereby the fee awarded to you at the end of a case will be a previously agreed percentage of your client’s winnings.

But this might be a tough sell for your client when trying to attract business. Especially for independent lawyers and sole practitioners, where that client may be at the very bottom of the market.

Actually, a few unanswered questions remain surrounding the issues of DBAS, including how the following will be dealt with:

potential conflicts of interest

differing terminology between the primary legislation and the DBA regulations

assessment of costs when there is no agreed hourly rate under a DBA

In reality, there is very little guidance as to how these new DBAs will work in practice. You could consult the Damages-Based Agreement Regulations 2013, SI 2013/609, of course. Or the CPR provisions. But these only cover pretty basic information.

3. Payments on Account

These have now become almost mandatory. Where the court has ordered a party to pay costs, the court may decide to order that an amount should be paid on account before assessment of those costs: but this is costly and uncertain if your lay client has not put you in funds.

4. Increased sanctions under Part 36

A new sanction has been introduced to Part 36, intended to encourage earlier settlement. The 10% increase will apply to all non-pecuniary general damages whether the claim is brought in contract or tort. It will apply as follows:

in a damages claim – 10% of the damages

in a non-damages claim – 10% of the costs

in a mixed claim for damages and non-damages – 10% of the damages element of the claim

The introduction of these new rules may result in a period of deep uncertainty in case law, with issues that can only be ironed out in the courts.

To help you navigate this potentially treacherous ground, we’ve produced a free report on the Jackson Reforms – The Costs of Change – that highlights how these changes will affect the business of independent lawyers. For clarification on the new provisions, with information on all the possible pitfalls, download the report below:

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MEET JON

Jon is the not-so-mysterious man behind the business of law blog and a big advocate of independent legal practitioners. As market development director at LexisNexis, Jon has 15 years of experience in research, insight and business strategy.